“Telstra confirmed it was in discussion with Philippines’ largest conglomerate San Miguel Corporation (SMC) — whose investments span across food, packaging, energy and beer — in what could be the telco’s first foray into the South East Asian consumer market.

Philippines’ mobile market is currently dominated by PLDT and Globe Telecom with a mobile penetration rate of more than 100 per cent but with most of its services relying on outdated 2G services. An investment with San Miguel could see to a quicker rollout of 4G services which covers less than 5 per cent of the market.

Earlier this year, Telstra CEO Andy Penn described Asia as a key part of his growth strategy building on former CEO David Thodey’s vision to see a third of the telco’s revenue coming from Asia by 2020.”

“Local conglomerate San Miguel and Telstra of Australia have confirmed they are in talks over a wireless joint venture that, on the face of it, is entering a crowded market.

If the San Miguel-Telstra venture goes ahead, it will not be the Australian telecom group’s first attempt to break into other Asian markets.

Telstra is eager to expand out of its home base, with its Asian businesses supplying just a tenth of its revenues. Telstra may make the ideal partner for San Miguel, which has been acquiring licences and permissions but so far has lacked expertise. The question is whether the pair will have the marketing power to carve out a viable market share.”

October 29, 2015

The Sydney Morning Herald published, “Telstra to cut costs and spend up to $US1 billion in Philippines to fight rivals.”

Stated:

“Speaking to investors in Sydney on Thursday, Mr Penn also revealed that the telecommunications giant was willing to pump up to $US1 billion ($1.4 billion) into owning a 40 per cent stake of a joint-venture to build a new mobile network in the Philippines, which would value the South-East Asian company at $US2.5 billion.

Mr Penn also provided a much clearer picture of Telstra’s potential partnership with Philippines beer and food giant, San Miguel. Both companies want to become a third force in the Philippine’s mobile market, up against local incumbents PLDT and Globe Telecom.

But Mr Penn provided more clarity and said Telstra would spend no more than $US1 billion for a 40 per cent stake of a joint-venture, which is the most a foreign company can own there. This money would go towards the construction of the mobile network along with extra cash raised by borrowing from banks.

“Let’s face it – go to the Philippines, experience for yourself the sort of lousy service you get from the incumbent operators and you will see that the opportunity there for new operators to provide a much better quality service over an LTE network using better spectrum,” he said.

“As for why not Myanmar … we recognised [the Philippines] would be a significant project and we got a lot of work there supporting San Miguel in terms of network rollout and design.”

Eduardo M. Cojuangco, Jr.Chairman and Chief Executive Officer (CEO) of San Miguel Corporation,80 years old,CEO since 1998(Image from Google)

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